Finder makes money from featured partners, but editorial opinions are our own.

Private health insurance tax guide

There are 3 ways you can pay less tax with private health insurance.

What you need to know

  • Having private health insurance can save you tax if you earn over $93,000 per year ($186,000 for couples).
  • Your age can impact how much you pay for health insurance but will not affect your income tax.
  • You may be eligible for the private health insurance rebate if you earn below a certain amount.

Private Health insurance and tax – at a glance

Here are the 3 main ways to use health insurance to save on your tax in Australia.

  • Piggybank and a coin

    Save up to 1.5% in tax

    Depending on your income, not having hospital cover can cost you 1%, 1.25% or 1.5% of your annual income. Don't get stung by the Medicare Levy Surcharge (MLS).

  • Bar graph with arrow showing an increase

    Stop your premium rising by 2%

    If you don't have hospital cover by 1 July after your 31st birthday, your health insurance premiums will go up by 2% per year because of the Lifetime Health Cover loading (LHC)

  • Curved arrow around a dollar sign

    Get a tax rebate of up to 33.88%

    Take out private health insurance and, depending on how much you earn, get nearly 34% of your premiums back thanks to the Private Health Insurance Rebate.

Compare health cover to avoid extra levies and taxes

Below are some basic policies from Finder partners with enough cover to avoid both the Lifetime Health Cover Loading and the Medicare Levy Surcharge. All prices are based on a single individual with less than $93,000 income and living in Sydney.

Name Product Treatments Price Apply
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$79.88
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$81.90
per month
Basic Plus Hospital $750
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +6 other treatments covered
$82.21
per month
Frank Entry Hospital (Basic+)
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$82.48
per month
starter basic
Basic$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$82.71
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$83.95
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$85.23
per month
starter basic
Basic$500 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$85.76
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$85.82
per month
Basic Plus Hospital $500
Basic Plus$500 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +6 other treatments covered
$85.92
per month
essentials basic plus
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$87.04
per month
Basic Plus Hospital 750
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +6 other treatments covered
$87.72
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +7 other treatments covered
$88.30
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +7 other treatments covered
$89.42
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +7 other treatments covered
$92.18
per month
loading

Why compare health insurance with Finder?

  • We don't ask for your phone or email to see prices.

  • With 1 click, you can open your results to nearly every fund in Australia.

  • You pay the same price as going direct – we charge no fees.

Start comparing for freeStart comparing for free

3 ways private health insurance can help you save: more detail

number 1

The Medicare Levy Surcharge

Here's a more detailed breakdown of the Medicare Levy Surcharge and what you'll pay – according to new thresholds coming into force on 1 July 2023:

  • 1% for singles earning over $93,000 ($186,000 for families)
  • 1.25% for singles earning over $108,001 ($216,001 for families)
  • 1.5% for singles earning over $144,000 ($288,001 for families).

How do I avoid it?

Take out hospital cover through a registered Australian health fund. To meet the minimum requirements, you generally just need a basic hospital policy with a $750 excess or less if you're single, or $1,500 or less for all other policies. Remember that extras cover doesn't exempt you from the MLS and income thresholds for families increase by $1,500 per child after the first child.

How is it calculated?

The MLS takes into consideration:

  • Your taxable income
  • Your total reportable fringe benefits
  • Any amounts on which family trust distribution tax has been paid.

number 2

Lifetime Health Cover Loading

The Lifetime Health Cover Loading was set up to encourage young Australians to take out private health insurance earlier. It adds 2% to the cost of your health insurance premium for every year that you don't have hospital cover once you turn 31.

For example, if you don't buy a policy until you turn 36, you'll be hit with a 10% charge. This additional charge is payable for 10 years. The maximum loading is capped at 70%.

To avoid it, simply take out cover before your base day. This is the 1 July following your 31st birthday.

The LHC loading is not an income tax – the loading is added to your health insurance premiums, only if you ever decide to take out hospital insurance. If you never take out hospital insurance, you won't be impacted by the loading.

LHC exemptions

  • Australians who were born on or before 1 July 1934
  • Serving members of the Australian Defence Force (ADF)
  • Department of Veterans' Affairs (DVA) Gold Card holders
  • Learn more about LHC exemptions and special conditions.

number 3

Private health insurance rebate

The private health insurance rebate was introduced to make private health insurance more accessible to Australians. The rebate is calculated based on an individual or family's taxable income and the number of children they have. To be eligible:

  • You must fall under the age and income thresholds
  • You must be a green or blue Medicare cardholder
  • You can still claim the rebate with extras only cover.

How do I claim the rebate?

  • Through tax when you complete your annual return, or
  • As a premium reduction when you take out health insurance.

Private health insurance tax rebate levels – effective from 1 July 2023

Thresholds≤$93,000$93,001-108,000$108,001-144,000
< Age 65
24.608%16.405%8.202%
Age 65-69
28.710%20.507%12.303%
Age 70+
32.812%24.608%16.405%
Thresholds≤$186,000$186,001-216,000$216,001-288,000
< Age 65
24.608%16.405%8.202%
Age 65-69
28.710%20.507%12.303%
Age 70+
32.812%24.608%16.405%
Data source: PrivateHealth.gov.au. Rebate levels are effective from 1 July 2023.

Why you can trust Finder's health insurance experts

free

We're free

Our health insurance engine is completely free to use. You pay the same as buying directly from the health insurer. Better still, we regularly run exclusive deals that you won't find on any other site.
expert advice

We're experts

We've researched and rated hundreds of policies as part of our Finder Awards. We've published 250+ guides and our in-house experts regularly appear on Sunrise, 7News and SBS News.
independent

We're independent

Unlike other comparison sites, we're not owned by an insurer. That means our opinions are our own and you can compare nearly every health fund in Australia on the site (and find a better deal).
help

We're here to help

Since 2014, we've helped 350,000+ people find health insurance by explaining your options simply. We'll never ask for your number or email to see prices. We're here to help you make a decision.

Frequently asked questions

More guides on Finder

  • Lifetime Health Cover Loading

    Are you over 31 years of age and don’t have private hospital cover? Then read this guide, because it could save you a LOT of money in the future.

Go to site